Does the payback-period analysis ignore differences in the timing of cash flows?

Q: Where are gains and losses related to cash flow hedgesinvolving anticipated transactions reported?

A: Derivatives: Derivative is a product whose value is derived from underlying assets called base.…

Q: What is Internal Rate of Return - Variable Cash Flows with Reversion?  Please provide examples.

A: The internal rate of return is the one of the discounted techniques of capital budgeting which is…

Q: What are the two fundamental approaches to Probabilistic Cash Flow Analysis? What are its benefits?

A: The two fundamental approaches to the probabilistic cash flow analysis is shown as follows: Cash…

Q: Describe the Replacement Analysis Using the Cash-Flow approach?

A: The cash flow approach clearly reflects the real cash-flow effects for each replacement option as it…

Q: How is payback calculated with equal net cash inflows?

A: A payback period is the amount of time needed to earn back the cost of an investment. The length of…

Q: Discuss Positive side effects and negative side effects cash flows? Provide examples. Explain the…

A: Solution- What is Cash flow-         Cash flows are internet the net of money and cash-equivalents…

Q: Describe the procedure of Estimating Risky Cash Flows?

A: Risky cash flow means the future cash flow which falls short of the expectations. This shortage may…

Q: What are normal and nonnormal cash flows?

A: Answer: Normal cash flows projects are those in which one or two cash outflows occur at the outset…

Q: what are usefulness and weakness of discounted cash flow method?

A: Discounted Cashflow Method is the Method in which we compare Initial Project cost with expected…

Q: What condition regarding cash flows would cause more than oneIRR to exist?

A: IRR (Internal Rate of Return) is the interest rate where net present value of a project equals to…

Q: What are the interest formulas for single cash flows?

A: Present Value: The value of today’s amount to be paid or received in the future at a compound…

Q: How is IRR calculated with unequal net cash inflows?

A: Definition:   Internal rate of return method (IRR): Internal rate of return method is one of the…

Q: What are the techniques for establishing cash flow equivalence with compound-interest?

A: Cash flow equivalence is established using the compound interest because investors prefer the amount…

Q: What are the basic differences in the direct method vs. the indirect method of presenting the…

A: Statement of cash flows is one of the financial statement which shows all cash inflows and cash…

Q: If current liabilities increase, what is the effect on cash? What about a decrease in current…

A: Liabilities: The claims creditors have over assets or resources of a company are referred to as…

Q: How can we separate cash flows from operating cash flow?

A:

Q: How can we develop the techniques for establishing cash flow equivalence with compound-interest…

A: Answer: To measure the equivalence of the sequence of compound interest factors used to extract the…

Q: What is the purpose of cash flow analysis?

A: Cash flow Statement: It is prepared by the companies. It is a tool in the hands of users of…

Q: What role do incremental cash flows play in a replacement analysis?

A: Answer: Introduction: Replacement analysis is one of the key analyses in the concept of capital…

Q: How are incremental cash flows found in a replacement analysis?

A: The choice to substitute an existing asset with another is defined as the net current and internal…

Q: What is irregular cash flow stream?

A: Cash Flow has a flow concept. There can either be cash inflow or cash outflow. Generally, for…

Q: What is the process of solving a cash flow for an unknown interest rate?

A: Time Value of Money: According to the concept of TVM, the company always interested to know the PV…

Q: What is discounting and why do we discount future cash flows?

A: A cash flow statement is a financial statement that shows how much cash and cash equivalents are…

Q: Describe the process of estimating Risky Cash Flows?

A: Process of estimating Risky Cash flows.

Q: Write the Interest Formulas for Single Cash Flows?

A: Time value of money: Time value of money refers to the concept that the value of money available at…

Q: In the discounted cashflow method, the discount rate is used for the following reasons EXCEPT a. it…

A: Discounted Cashflow Method: The discounted cash flow (DCF) approach is a method of valuation that is…

Q: What cash flows are associated with Descartes’ rule of signs and Norstrom’s criterion?

A: Cash flows series can be of two types i.e. non-conventional and conventional cash flow series. Non…

Q: What are the strenghts and weaknesses of the discount cash flow methods?

A: discounted cash flow methods are used to calculate to find the future cash inflow discount into its…

Q: why discounted cash flow methods are preferred to the more traditional techniques of payback and…

A: Before knowing the reason of preference for the use of any method, let us see the basic description…

Q: Why are the cash flows so difficult to estimate accurately?

A: Statement of cash flows: Statement of cash flow is a financial statement that shows the cash and…

Q: The difference between the sources (in nows) and uses (out nows) of cash represents the net cash…

A: Answer: Cash flow is nothing but the inflows and outflows of the business income. Cash flow is…

Q: What is the principal disadvantage of the direct method of reporting cash flows from operating…

A: Cash flows from operating activities is an important section of cash flow statement which shows all…

Q: Which is higher, net earnings or operating cash flows? Which line item is the biggestreason for this…

A: Operating activities: Operating activities refer to the normal activities of a company to carry out…

Q: How do we measure and compare various cash flows?

A: Cash flows are described as those movements of cash which result from the various activities of the…

Q: What are some of the arguments in favor of using the indirect (reconciliation) method as opposed to…

A: Statement of cash flows: The statement of cash flows is a statement which includes all transactions…

Q: Discuss why the present value of cash flows and the relative valuation ratios valuation approaches…

A: Valuation of entity is done in two methods as: Discounting expected inflows from entity in upcoming…

Q: Briefly explain the concept of discounted-cash-flow analysis. What are the two common methods of…

A:

Q: Describe the method used to separate cash flows from operating cash flow?

A:

Q: For the below cash flows: (a) Determine the number of positive roots to the rate of return relation…

A: Note that the first and last values are negative so there are two sign changes, from EOY 0 to EOY 1…

Q: How is payback calculated with unequal net cash inflows?

A:

Q: Why do the payback period analysis fail to recognize the difference between the present and future…

A: Pay-Back (PB) Period is time in which Initial outlay related to proposed investment is completely…

Q: The discounted payback method discounts cash flows at the opportunity cost of capital and then…

A: Cost of capital denotes that cost which a firm is required to pay to finance the amount for the…

Q: What are the strenghts and weaknesses of the Discounted Cash Flow methods

A: Cash flow is the movement of money from a particular investment. Discounted cash flows mean…